Gambling Industry Potential Mergers & Acquisitions

With much of the Internet gambling industry on the rocks thanks to the Unlawful Internet Gambling Enforcement Act of 2006 (UIGEA), it is not unlikely that we will see a number of mergers and acquisitions (M&A) in the near future as the strong attempt to become stronger and the weak either merge or whither away.


This process has already begun, with 888 acquiring Globalcom LTD in March of 2007 and Party Gaming acquiring both Empire Online and Intercontinental Online in December of 2006. BWIN entered negotiations with Sportingbet, but talks ended when the two companies were unable to come to a mutually satisfying agreement.


At present, neither Sportingbet or Party Gaming are in a financial position to make acquisitions. Sportingbet has experienced a negative cash flow over the last nine months, only seeing a minimal positive gain in the last quarter. Party Gaming also maintains a negative cash flow as of
December 31, 2006.


BWIN and 888, on the other hand, still maintain the balance sheet to continue M&A proposals, should the right opportunity present itself. Both companies possess enough free cash available to make significant acquisitions.


Unibet Plc. is also in the market for M&A. CEO Petter Nylander revealed that Unibet was in discussion just last week with several companies, but were unable to agree upon a price. Nylander stated, "We have a list of 5 to 7 companies which we are looking at. The ambition is to present an acquisition this year, but the most important thing is not to conclude a deal fast but to get it right."